Tacoma-based MultiCare Health System, Pierce County’s largest private employer, announced Tuesday that it would eliminate by early autumn up to 350 positions from its work force of 9,400.
In the first round of selecting which positions will be lost – and before mandatory layoffs – MultiCare employees will be offered the opportunity to retire or leave voluntarily.
The company will offer those departing a severance package that includes cash and paid medical insurance through the end of the year.
“It’s a difficult time for our organization,” said Diane Cecchettini, MultiCare president and CEO. “We’ve agonized about this decision but feel that it is the right decision.”
In a letter to employees sent late Monday, Cecchettini cited “a very tough environment due to declining reimbursement for the services that we provide.”
She said MultiCare will receive $37.6 million less reimbursement for the 2011-2013 biennium than offered by the state in the most recent biennium. The figure includes a $10 million reduction that began July 1. The health system also has faced $14.8 million in additional expenses from charity care and bad debt through May, compared with the same period last year.
Cecchettini explained to employees that rather than make across-the-board cuts, the company would seek “careful reductions in areas where there are cost-saving opportunities.”
“We will be careful in those decisions not to affect the quality of patient care,” she said.
Shelly Mullin, MultiCare vice president and administrator at Tacoma General Hospital, said no positions had yet been specifically targeted.
“We’re still evaluating where those might be. We’re being thoughtful and careful. We’re still in a planning process,” she said.
The layoffs become effective Oct. 7, and no cutbacks are planned in salaries or benefits. “It’s not part of our plan for any of our employees to take a pay cut,” said MultiCare spokeswoman Marce Edwards on Tuesday.
MultiCare operates more than 100 facilities in Pierce and King counties, including four hospitals, 84 clinics and 22 program-outreach offices.
Construction of a freestanding emergency department in Covington will continue, Cecchettini said, as will “detailed planning” for a MultiCare hospital in Covington.
Bruce Kendall, president and CEO of the Economic Development Board for Tacoma-Pierce County, said about Tuesday’s announcement: “Obviously we share the concerns of the leadership of MultiCare that this is something they are not pleased to be doing. No one ever would be.”
He said the health system “for many years has been one of our strongest employers in Pierce County, and that will remain so even after this layoff. The health care industry will continue to be an important part of the national economy and certainly our economy here as well.”
The demand for health care services is “clearly there,” Kendall said. “The question is: How is it going to be paid for? It’s only because we have great institutions like MultiCare that we can say we provide world-class services. What we don’t have is a world-class way to ensure that those services are paid for.”
As of May, 43,100 persons were employed in the health care and education sector in Pierce County, said state Employment Security Department Regional Economist Paul Turek on Tuesday.
That sector, he said, “tends to be the most stable sector of the economy” and is not generally affected by recessions to the extent other industries might be.
A stable sector, however, might “lose ground. That’s not a good sign, given the fragility of the economy.” He did not see MultiCare’s announcement as an industry-wide bellwether.
“It’s not something that’s going to wave across the industry in general,” he said. “It’s individual decision-making.” Rick Van Cise, ESD spokesman, said Tuesday: “We’re not seeing any trend statewide” related to health care cuts.
Meanwhile, the second major health care company in Pierce County does not foresee immediate cuts in employment. “Franciscan Health System does not have plans to lay off employees,” said Franciscan spokesman Gale Robinette.
“Our hearts go out to organizations that must make the difficult decision to reduce staff,” he said. “Our organization is not immune to the same factors. It’s a difficult time in health care.”
At Franciscan, he said, “department directors are looking at job openings, and managers and executives will be reviewing all new and replacement positions very critically.”
“When I talk to other CEOs, everybody’s struggling with the challenges,” said Cecchettini. “We have had jobs. We’ve been stable. We’ve not done a layoff on this layer of magnitude since 2004.”
She said she feels a responsibility to patients and to the organization as well as to the people who will lose their jobs.
“It feels painful. Painful. I’m saddened by it,” she said. “I’m very aware of the faces. I don’t think any CEO likes to be in this position. It’s miserable.”
C.R. Roberts: 253-597-8535
c.r.roberts@thenewstribune.com
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